The council itself will not be undertaking the development - but have cleared the 2.45 acre site on Birches Barn Road of buildings to make it more attractive to offers from potential developers.
The outline planning permission includes the provision of 25% affordable housing.
The development will also contribute towards the council's target of 13,400 new homes in the city between 2006 and 2026.
Penn Fields School moved to a new multi million campus across the city earlier this year.
Councillor Peter Bilson, Cabinet Member for City Assets, said: "This is yet another example of the council facilitating housing developers to come into the city by making land available and easy to develop.
"The creation of more new housing in Wolverhampton, especially affordable properties, is one of our top priorities and the development of this land will certainly help us achieve that."
Bruton Knowles have been appointed as the marketing agents and for viewings can be contacted on 0121 200 1100.
- released: Monday 7 September, 2015